California Firms Bet on Dallas-Fort Worth Industrial Market

Two companies are making a significant investment in the country’s largest southern industrial market. CT Realty Investors and Xebec Realty Partners, both based in California, have acquired a 530-acre site in the South Dallas Intermodal Hub and plan up to 9 million sq. ft. of new buildings.

J.C. Watson, CEO of Aliso Viejo, Calif.-based CT Realty, says the companies are betting that the success of the Los Angeles-Long Beach market will extend into the Dallas-Fort Worth industrial market, both totaling almost 2.5 billion sq. ft. of rail-connected warehouse and logistics space. “The container traffic is just expanding fast, you’ve got 40 million containers going through the U.S. ports today compared to 1 million 30 years ago, and this is one of the largest inland ports in the country,” Watson says.

The South Dallas market is an up-and-comer for new development, Watson says. The submarket held about half of the 1.3 million sq. ft. of new construction in the Dallas-Ft. Worth market in 2012, and had the lowest vacancy rate of the region at 5.6 percent, according to a Newmark Grubb Knight Frank fourth quarter report.

The region was also second to only Chicago for absorption in 2012, with almost 10 million sq. ft. on the plus side, mostly due to the intermodal activity. The CT-Xebec land, to be known as Southport Logistics Park, will capitalize on intermodal, being about a half-mile from the 360-acre Union Pacific Intermodal Yard and just two miles south of the FedEx Ground Hub in Hutchins, Texas. The property had been mired in litigation after it was purchased from Union Valley Ranch LP in 2004,

Seal Beach, Calif.-Xebec and CT Realty are bringing their expertise from the West Coast into Texas. CT Realty has acquired almost 6 million sq. ft. of industrial in Southern California in the past 24 months, including a number of vacant big box properties. Xebec has developed more than 40 projects in California in the past 27 years, and is one of the most active developers of infill warehouses in Southern California.

Watson says the companies plan to build a number of high-clear distribution and e-commerce logistics buildings ranging in size from 500,000 sq. ft. to 1.5 million sq. ft. at Southport. “These will be the same product that’s going up on the California market, with sophisticated material handling systems and stacked space, requiring more land around the buildings,” he says. “We’re coming off the heels of three-to-four years of slow activity with very little new construction, so we think we’re strategically positioned for strong growth.”

He says the first building will likely go up in 2014. “We’ve got a ways to go, we just closed, and there’s a lot of improvements to make to the property,” Watson says.

David Anderson with CBRE represented the buyers in the purchase of the land, with the cost undisclosed. The company will also support the owners with leasing, sales and other support services.